Canadian company ships solid oil sands bitumen to Chinese refinery

CALGARY, Alberta (Reuters) - A Canadian company has loaded a test cargo of solid bitumen onto a vessel destined for a refinery in China, the latest effort by the energy industry to avoid congested export pipelines and find new ways to export more oil sands crude.

Calgary, Alberta-based Melius Energy loaded 130 barrels of neat bitumen, similar in consistency to a hockey puck, onto a 20-foot shipping container in Edmonton, Alberta, and transported it by rail to the Port of Prince Rupert in northern British Columbia. The cargo is now on its way to a Chinese refinery.

A number of firms including CN Rail have been working on processes to solidify diluted oil sands crude so it can move more cheaply and efficiently by rail and ship. Solid bitumen is also considered less hazardous than liquid crude because it is not combustible and would float on water.

Canada’s oil sands hold the world’s third-largest crude reserves, but development has been slowed by a lack of new export pipelines. Environmental opposition and regulatory delays have held up new projects including the Canadian government-owned Trans Mountain expansion, resulting in declining capital investment and weak Canadian crude prices.

Yuri Butler, manager of logistics and supply chain at private company Melius, said he believed its cargo was the first-ever export of solid bitumen to China. He declined to name the buyer.

“The most exciting part is once you put it in a container, you can ship it anywhere in the world,” Butler told Reuters. “It opens up new markets for Alberta.”

Shipping neat bitumen in containers also sidesteps an oil tanker ban along British Columbia’s northern coast that was introduced this year by Canadian Prime Minister Justin Trudeau’s Liberal government.

Bitumen extracted from the oil sands has to be diluted with ultra-light hydrocarbons so it can flow through pipelines. The bitumen shipped by Melius is returned to its solid state through a patented process known as BitCrude, which uses an electrically powered diluent recovery unit.

The 200-barrel diluent recovery unit is modular, meaning it can be scaled up in size. Butler said the cost of shipping solid bitumen was competitive with transporting liquid crude via pipelines and tankers and that Melius was in talks with several oil sands producers about potential deals.

Alberta Energy Minister Sonya Savage celebrated Melius’ first BitCrude shipment to international markets in a tweet on Wednesday.

“I’ve been following BitCrude for awhile and am pleased to see exports off the NW coast of B.C!” she wrote.